On Wednesday, Sri Lankan troops moved north west from Puliyankulum railway station (which is due west of the town), and reached Puthur (pronounced poodhoor) approximately 6 miles away. The Sinhalese soldiers are believed to have established defensive positions in the vicinity of Puthur, to wait out the night before advancing further.

Just after midnight, LTTE commandos launched a major counter attack on the Sri Lankan positions. Avoiding claymore mines around the perimeters, the Tigers had stormed into the defences and pitched hand to hand fighting had followed in the dark.

The Sri Lankan defences had collapsed and the Sinhalese troops had broken and fled in disarray, having suffered at least 40 killed and over 30 wounded. The Tigers had secured the re-captured positions. The Tigers lost 13 fighters, including 2 women. The Sri Lankan army has only acknowledged the loss of 12 men.

Dawn revealed the extent of the rout. 17 Sri Lankan bodies had been left where they had fallen. Equipment was strewn everywhere: Helmets, field packs, clothing, dozens of canteens, and some personal effects, dropped in haste.

A large quantity of ammunition was also captured, including 34 mortar shells, 33 RPG rockets, and several thousand rounds of belted ammunition. The Tigers had also captured over 60 claymore mines, many of which had been rigged to be triggered, but the operators had been killed within the opening seconds of the fire-fight.

Repeated tank-led Sri Lankan assaults over the past few weeks have failed to dislodge the Tiger defenders in Puliyankulum. Several SLA tanks have been destroyed in carefully prepared kill zones. The Sri Lankan army launched a flanking movement around Puliyankulum, perhaps in a bid to encircle or even bypass the small town.

Having reached Puthur, which is north west of Puliyankulum, if the Sri Lankans had moved due east, they would have cut the road leading north from Puliyankulum to Mankulum. The SLA could then have been able to use the 'hammer' of the troops south of Puliyankulum against the newly inserted 'anvil' to the north of the town.

The LTTE counter attack had come at night, an unusual practice for the Tigers, who prefer not to launch committed counter attacks in the dark with insufficient reconnaissance. It was by moving at night that the SLA was able to make headway around Paranthan's defences in September 1996. This time however, the LTTE seemed to have prepared its ambush zone in advance.